Which activities are included in cash flow from operating activities?

Cash flow from operating activities refers to the money generated or used by a company’s core business operations. This includes cash transactions related to the day-to-day functioning of the business, such as cash receipts from customers for goods sold and payments to suppliers for inventory purchases.

Daily operational transactions encompass activities like sales revenue received and cash paid for operating expenses, such as wages and rent—these are pivotal for assessing the company’s ability to generate cash from its normal business operations. This section of the statement of cash flows emphasizes the ongoing profitability and operational efficiency of the business.

In contrast, the other options pertain to different aspects of the cash flow statement. Long-term asset management relates more to investing cash flows, as it deals with the purchase and sale of long-term assets. Payments to borrowing and equity typically fall under financing activities, focusing on cash transactions related to the capital structure of the company. Finally, equipment purchases are also considered investing activities, as they involve cash used to acquire long-term physical assets for business operations but do not reflect the operational performance directly.